Managerial thoughts

Profit = F(Customer level satisfaction, Employee satisfaction level, shareholder satisfaction level)

The profit depends on the satisfaction levels of the three main stakeholders in the company who are the customers, the employees and the shareholders . The role of the managers is to maximize the profit of the company by optimizing the satisfaction level of its three main stakeholders listed above..

The ferocity of the competition is currently such as the companies are pushed to a thinner profit margin since they don't set the price of their products or services. Rather, it is the market that does it for them. 

 So, what should the companies do to improve its efficiency and its profits? The companies should primarily control their costs that are themselves depending on their immediate environment.

The control of the company costs is a matter on which many experts have written by using an arithmetic approach which is, in my opinion, an accounting vision at short term and does not need to be further developed here. So, in this article I will outline a new approach which demonstrates that the best way for a company to make profits is to control its immediate environment whether internally or externally.

Banks and governments on the one hand and the market on the other hand are the main players of this environment that the management of the company should consider when facing competition.

The banks are privileged partners of the companies where the preservation of the interests of both parties premium. It’s also the key to their respective success.

The governments are organized to regulate the market, to encourage investment to stimulate the employment and to protect the population from outlaws companies. Relationships are formalized and the obligations of each other are generally respected.

From that environment, it remains only the market of which the managers of the company have to face. It is really the main metric to measure the efficiency of the company managers. 

To do this, the company needs shareholders, employees and customers to invest, develop, produce and sell its products or services. They are really the most influential players within a company that the management should put at the top of the list of their priority.

I am sure that you will agree with me by stating that the players mentioned above are complementary, but their goals are often opposed.

The customers want lower prices and higher quality of the products or service they buy. The employees want higher salaries and a perfect working environment. The shareholders want higher return on their investment in the company.

How should the managers reconcile and meet the needs of each of these players  without compromising at mid and long term the financial equilibrium of their company.

This is a three-dimensional equation. The profit depends on the satisfaction levels of the three main players in the company who are the customers, the employees and the shareholders. It is represented by the following formula:  P = F (x, y, z) 

• P = Profit

• x = level of customer satisfaction

• y = Level of shareholders satisfaction

• z = level of employee satisfaction

The role of the managers is to maximize the profit of the company by optimizing the satisfaction level of the three main players identified above

1st BEST PRACTICE - Ensure that the customer's requirements are well understood 

1. Analyze your customer’s requirements to better understand their needs. This is the first preventive action you have to take within your company to ensure the success of the project you conduct.  It allows you to examine the feasibility of the customer's request and to ensure that you have in your company the necessary skilled resources to meet all the customer’s requirements. For that purpose, you have to answer the following questions:

a) Did we understand the customer’s requirements? This is the first question you have to ask yourselves within the company. If so, you will proceed directly to the next question (b). If not, you have to communicate and to exchange information with your customer until you ensure that the requirements are understood within your company.

b) Do we have the necessary human and material resources to meet the customer requirements? If not, could we acquire the missing resources to complete the project on time and with the required quality? In case of doubt, you have to communicate and to discuss this with the customer. There are two alternatives in dealing with this issue.

- You notice, after clarification provided by the customers and or by reviewing some of their requirements that you already have or you can easily acquire the required human and material resources to meet the customer’s requirements. It’s good to go and start the proposal process.

- You notice that despite the discussions conducted with the customer, you don’t not have or you cannot acquire on time the necessary human and material resources to meet the customer’s requirements. You have in that case to give up and to stop the proposal process.

2. Draft the proposal is another activity that you have to organize before submitting it to the customer. It ensures that your proposal will meet the customer’s requirements. It also ensures that the agreed deadlines for submission are respected.

- Establish the plan for preparing the proposal;

- Define the tasks to be carried out in order to prepare the proposal

- Assign tasks and deadlines to each of the persons in charge of responding to the customer's request;

- Review and evaluate the responses;

- Consolidate the content of the responses into one proposal;

- Revise the proposal and make the appropriate corrections if necessary;

- Submit the technical and financial proposal to the customer.

3. If your proposal is accepted by the customer, you will move forward. Otherwise, you have to analyze the reasons for the rejection of your proposal and you have to take action for your future submissions (lessons learned).

3. This way of doing business allows you to gather the best conditions for the success of the project you will conduct and thus guard you against possible misunderstandings of the customers’ requirements. The satisfaction process of your customers starts with an exhaustive understanding of their needs.

Notes : Whether the design and development project request comes from an external or internal customer (company management), this 1st step should be conducted by the business development manager and the designated project manager in association with all those stakeholders of the design and development process .

2nd BEST PRACTICE - Associate your customer in the major events of the design and development projects

1. Plan the activities of the design and development of the project

a) Define the role and responsibilities of each stakeholder in the design and development of the project to ensure that all the scheduled activities will be completed;

b) Determine and allocate the required resources to ensure that the design and development activities will be completed on time and with the quality agreed with the customer;

c) The planning activities ends by drafting and sharing with your customer  the following documents:

- A detailed schedule defining and assigning the roles and responsibilities of each stakeholder in the design and development activities;

- A development plan defining the methods to be used, the stakeholders, the steps to follow and the tools and the environment in which the product will be developed;

- A quality plan defining the methods, the tools to be used, and the points of the quality control as well as the evaluation and the management of the results of these points of control. 

      You want more about this article, click here:  Best pratices for conducting DDP 

Few months ago, I had a semantic discussion with one of my colleagues about the management and the leadership. He thinks that a manager does not have to be a leader to manage a team.  Unlike my colleague I think that a manager has to be a leader to succeed.

An efficient manager is not the one who controls only a group of workers to achieve goals, but he is also the one who influences and inspires a group of workers to achieve common goals. I learned from my over 25 years’ work experience as manager that the success of a manager depends on how he manages his team. All those managers who have shared the meaning of the goals and the importance of their achievement as a team and who have inspired and influenced the members of their team by setting a good example through their actions, their professionalism and their attitude[...] in work have succeeded.  

This discussion has inspired me to build 10 key tips which I think could make a manager an efficient manager able to develop and enhance his leadership skills, to create a good work atmosphere, and to achieve bigger goals with the team he leads:

More about this article , click here: Efficient-Manager-20.pdf



Overview 

Control Vs. Coaching

1. The systematic control of the employees in a company does not prevent them to make mistakes . Worse, when it is done indiscriminately, it kills the initiative and creates a kind of self-censorship harmful to the creativity and performance.

2. A good coaching empowers more the employees and creates a team’s dynamic that allows them to communicate, to exchange information, to understand what is happening around them and to improve their performance accordingly.

Quality System Vs. Product Quality

1.The registration of a quality system to ISO standards is not enough to claim to quality within the company.

2.The registration of a quality system certifies only that the company has the necessary ingredients to make quality. The rest depends on the boldness and the dynamism of the company management.

Quality System = Profitable investment

1. The implementation of a quality management system is nota marketing formality that the top management has to  subscribe to improve the image of its company.

Nowadays, managers justify redundancies for budgetary constraints and performance reasons. They strongly believe that laying off employees allow the company to reposition itself for growth.

There is no doubt in my mind that the optimization of cost, quality and timelines is still and remains the winning solution for the development of any business. However laying off employees is not always a solution to make a company, an efficient company. The managers should look for the most appropriate way to rather make the employees of the company much more efficient.

In the managerial equation, I built an equation focused on the needs of the three major players within a company.

The role of the managers is to find the solution that meets the needs of these key players while maximizing the profits of their company. That solution could prevent redundancies and indirectly resolve the problematic of the cost, quality and deadlines. In the following, we will see how we can achieve it.

We saw in the 1980s interesting debate between managers about the usefulness of a budget within a company. Some consider that a budget is the most important aspect in the management of any business. It must be respected and no action should be undertaken outside of it. Others believe that the budget and the way followed to manage it, is an obstacle for the development of the company. They suggest focusing more on the performance management rather than the budgetary management. In 2013, this debate is still relevant within companies and even in some management schools.

Budgetary Management Vs. Performance Management

Isolating the budget from the performance of a company or vice versa is, in my opinion a wrong debate. I personally think that the managers should rather focus on the processes to be developed and to be implemented for setting up objectives and monitoring their achievement. 

Indeed, the traditional process for setting up and controlling budget as applied by many companies might be an obstacle for the development of the company. It is heavy, expensive and requires an extremely important human endeavor, often with results below expectations.

The companies currently operate in a very dynamic market where the needs daily change. The current market requires resources and a new style of management that the traditional management based only on budget model cannot face. In the traditional budgetary management, the major concern of the managers of the company is to respect the budget. It discourages initiatives and is an obstacle to business development in medium and long terms.

How many times we heard accounting managers saying to the operational managers looking for the performance improvement of their departments. No! You cannot do this, it is not budgeted. I am quite sure that some of the managers, who are reading this, do not know the objectives of their company or even their own objectives in their company. They just follow what their supervisors are asking them to do and their supervisors are doing what their managers are asking them to do.  In many companies, only the top management knows how and where the company is going. Instead to share the vision of their company and inculcate to their employees, they impose it. This is a short-term vision, because, it does not take the advantage of the intelligence of their employees when initiating the budgetary and performance management processes.

Unlike the traditional process, the budget as reference is an important element in the performance management. The managers should redefine the planning process for issuing budget and managing the performances.

The models currently offered by consultants in management and implemented, have not succeeded or have gotten very mixed successes, because those models still remain in my opinion, the preserve of the accounting managers and leave a little bit or no room at all for the non-financial or the non-accounting managers.

Operational managers should be active stakeholders

in the process for the management of the budget

and the performance of their company

Most of the CEOs empower the accounting managers to set up budgets and to manage the performance of their companies with an insignificant involvement of the operational managers who are the real work forces on which the success of the company lies. They often leave these processes solely in the hands of the accounting managers.

The success of a company relies not only on the effort that the accounting and financial managers make, but especially on the effort that all its workers make. Every manager within the company has to be an active player in the process for setting up the budget and managing the performance. The non-financial managers should know how to value their action programs and how to measure the performance of the services they manage. They should also know how to negotiate objectives inside of the company and decide accordingly about the actions to be implemented for improvement.

You want more about this article, click below:

Don--t-leave-the-management-of-the-performances-of-your-company-into-the-hands-of-your-accouting-managers_0.pdf